CONFIDENTIALITY OF CREDIT INFORMATION

Published — April 16, 2021

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers.
The Credit Information Corporation, the submitting entities, the accessing entities, the outsource entities, the special accessing entities and the duly authorized non-accessing entities shall hold the credit information under strict confidentiality and shall use the same only for the declared purpose of establishing the creditworthiness of the borrower.
The accreditation of an accessing entity, a special entity and/or an outsource entity which violates the confidentiality of, or which misuses, the credit information accessed from the Credit Information Corporation, may be suspended or revoked.

Financing companies are required to submit to the Credit Information Corporation (CIC) their basic credit data. This is imposed under Republic Act No. 9510 or Credit Information System Act.

The law was passed to establish a comprehensive and centralized credit information system in the Philippines.

These basic credit data however should maintain its confidentiality.

The law states that:

Section 2. Declaration of Policy. – The State recognizes the need to establish a comprehensive and centralized credit information system for the collection and dissemination of fair and accurate information relevant to, or arising from, credit and credit-related activities of all entities participating in the financial system. A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers.

The operations and services of a credit information system can be expected to: greatly improve the overall availability of credit especially to micro, small and medium-scale enterprises; provide mechanisms to make credit more cost-effective; and reduce the excessive dependence on collateral to secure credit facilities.

The State shall endeavor to have credit information provided at the least cost to all participants and shall ensure the protection of consumer rights and the existence of fair competition in the industry at all times.

An efficient credit information system will also enable financial institutions to reduce their over-all credit risk, contributing to a healthier and more stable financial system.

Thus, the Law addresses the need for comprehensive, centralized and reliable credit information system to:

Improve the overall availability of credit especially micro, small and medium-scale enterprises MSMEs;
Provide credit information at the least cost to eligible participants;
Ensure the protection of consumer rights and the existence of fair competition in the industry at all times;
Reduce the overall credit risk thereby contributing to a healthier and more stable financial system.

The CIC, the submitting entities, the accessing entities, the outsource entities, the special accessing entities and the duly authorized non-accessing entities shall hold the credit information under strict confidentiality and shall use the same only for the declared purpose of establishing the creditworthiness of the borrower. Outsource entities which may process and consolidate basic credit data are absolutely prohibited from releasing such data received from the CIC other than to the CIC.

The accreditation of an accessing entity, a special entity and/or an outsource entity which violates the confidentiality of, or which misuses, the credit information accessed from the CIC, may be suspended or revoked. Any entity which violates this section may be barred access to the credit information system and penalized under Act.

The CIC shall be authorized to release and disclose consolidated basic credit data only to the Accessing Entities, the Special Accessing Entities, the Outsource Entities and Borrowers. Basic Consolidated basic credit data released to Accessing Entities shall be limited to those pertaining to existing Borrowers or Borrowers with pending credit applications. Credit information shall not be released to entities other than those enumerated except upon order of the court.

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers.

The accreditation of an accessing entity, a special entity and/or an outsource entity which violates the confidentiality of, or which misuses, the credit information accessed from the Credit Information Corporation, may be suspended or revoked.